Murowa indigenisation deal awaits Mugabe

HARARE - Global resources group Rio Tinto says it expects to unveil its Murowa Diamonds indigenisation compliance plan when President Robert Mugabe resumes official duty next month.

Mugabe — who is the key driver of the empowerment programme through his Indigenisation minister Saviour Kasukuwere — is away on annual leave in the Far East.

A Murowa executive, who spoke to businessdaily on condition of anonymity, said everything was in place with the official launch only left.

“We are waiting for government to inform us on the official (launch) date. I believe this should be done when the President comes,” said the executive, without giving much detail.

Rio Tinto controls 78 percent of Murowa while the other 22 percent is held by Rio Zim.

According to reports, the indigenisation deal involves Rio Tinto ceding 29 percent of its stake in the diamond miner.

Out of the 29 percent, 10 percent would be transferred to a community trust, another 10 percent to employees while nine percent will be given to the National Indigenisation and Economic Empowerment Fund (NIEEF).

NIIEF, which serves as a sovereign wealth fund, was created to house indigenisation shares.

The value and financing for the transaction remains unknown, but reports say the parties might opt for notional vendor financing.

This would involve Rio Tinto providing credit to be repaid through forfeiting of dividend by the local shareholders.

Zimbabwe’s indigenisation law requires all foreign-owned firms with a net asset value of $500 000 plus — despite nature of operations — to cede at least 51 percent shareholding to locals.

Last month, government indigenised fellow platinum miner Mimosa.

Under its indigenisation plan, Mimosa — jointly-owned by platinum miners Impala Platinum and Aquarius — ceded a 51 percent stake worth $556 million to locals.

By signing an agreement or term sheet — outlining the implementation of its enhanced empowerment plan — with government, the southern Zimbabwe miner complied with the country’s indigenisation law.

Meanwhile, Defence minister Emmerson Mnangagwa has said all foreign-owned companies operating in the country will be indigenised and are free to move out if they do not want to comply with this law.

“There is no escape. If you cannot beat us, join us,” Mnangagwa said at the unveiling of Mimosa’s compliance plan.

“If there are any people who doubt that the indigenisation law is here to stay, they should think again. It might take us many years to mine our resources if investors move out, but our platinum or diamonds won’t rot. We can always exploit them when we acquire the technology,” Mnangagwa said.

According to independent financial advisor Brainworks Capital, Mimosa’s deal had a $93 million sovereign resource ownership value, while the share transfer would be fulfilled — over 10 years — through dividends. - Kudzai Chawafambira

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